CNB announced that it will set the limits for dividend payments conservatively for supervised institutions, in accordance with the ESRB Recommendation dated December 15, 2020. However, CNB will assess institutions' proposals for dividend payments individually, with focus on reviewing capital adequacy, risk profile, business model, and other significant factors. CNB will also discuss each case within the college of supervisors of the relevant financial group before making its statement. CNB assumes that financial institutions will come up with possible proposals only after they have the audited results for 2020 available.
Based on the initial ESRB recommendation dated May 2020, financial institutions should refrain from dividend payments until the end of 2020. However, later, another ESRB recommendation dated December 15, 2020 extended the horizon of limiting the payment of dividends by financial institutions during the COVID-19 crisis until September 30, 2021. This revised recommendation gave financial institutions the option of making a partial dividend payment, provided that they proceed very prudently and that the payment does not exceed the conservative limits set by the supervisory authority. ESRB requires national financial market supervisors to set limits on the concerned institutions, considering the need to maintain their capital at a sufficient level to limit systemic risks and to enable each institution to contribute to the economic recovery. ESRB also expects the national supervisors to ensure that the overall level of dividend payments by supervised institutions is significantly lower than in the years before the COVID-19 crisis.
Keywords: Europe, Czech Republic, Banking, Dividend Distribution, COVID-19, Regulatory Capital, Basel, Systemic Risk, CNB
Previous ArticleAPRA Connect to Go Live by September 2021
FDIC is seeking comments on a rule to amend the interagency guidelines for real estate lending policies—also known as the Real Estate Lending Standards.
MAS revised Notices 637 and 1111 on the risk-based capital adequacy requirements, along with Notice 656 on the exposures to single counterparty groups for banks incorporated in Singapore.
ISDA is consulting on the implementation of fallbacks for the sterling LIBOR ICE Swap Rate and for the USD LIBOR ICE Swap Rate.
SEC announced that the Office of Information and Regulatory Affairs released the Spring 2021 Unified Agenda of Regulatory and Deregulatory Actions.
BIS and BoE launched the BIS Innovation Hub Center in London, which is the fourth new Innovation Hub Centre to be opened in the past two years.
ESRB published recommendations on the reciprocation of macro-prudential measures in Belgium, France, Luxembourg, Norway, and Sweden.
MAS revised multiple notices that are applicable to banks and merchant banks in Singapore and have been issued pursuant to the Banking Act (Cap 19).
EC published the Delegated Regulation 2021/931, which supplements the Capital Requirements Regulation (CRR or Regulation 575/2013) with regard to the regulatory technical standards specifying the method for identifying derivative transactions with one or more than one material risk driver.
BCBS is consulting on preliminary proposals for the prudential treatment of cryptoasset exposures of banks.
EBA issued a revised list of validation rules under the implementing technical standards on supervisory reporting.